$A firms as US growth figures dismissed

The Australian dollar is higher after traders took a sceptical view of US growth figures. Source: Getty Images

THE Australian dollar is firmer as traders take a sceptical view of the fastest US economic growth pace in almost two years.

At 0700 AEDT on Friday, the local unit was trading at 90.66 US cents, up from 90.34 cents on Thursday.

The currency initially fell after official figures showed the US economy grew at an annual pace of 3.6 per cent during the third quarter, marking the fastest expansion in almost two years.

The Australian dollar then rose as the greenback weakened against the Japanese yen and euro.

BK Asset Management managing director Kathy Lien said the strong rise in inventories, which fuelled much of the strong US gross domestic product (GDP) growth, made traders sceptical about prospects for the fourth quarter.

"While we did have a very hot Q3 (third quarter) GDP number, it was primarily due to an inventory build-up and the personal consumption component actually dropped to its lowest level since 2009," she said from New York.

"It raised more concerns about what future numbers could look like." Separate US data showed a sharp 23,000 drop in first-time jobless claims during the last week of November, to a below-average level of 298,000.

But, Ms Lien said, a drop in the key Institute for Supply Management's US services sector reading for November made traders worry about upcoming official US employment data for last month, known as the non-farm payrolls (NFP), ahead of its release on Saturday morning, Australian time.

"Services jobs have weakened ... the market's concerns about the potential for a weaker NFP release tomorrow," she said.

A slow recovery in the US jobs market also means the US Federal Reserve could delay plans to taper its stimulus measures.

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